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Singapore and Hong Kong Race For Gold Benchmark - Use Brinks and Via Mat For Storage

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Singapore and Hong Kong Race For Gold Benchmark - Use Brinks and Via Mat For Storage 

Singapore and Hong Kong appear to be competing for the a new global gold price benchmark. Further details emerged at the weekend about the planned launch by
Singapore of a new 1kg physically deliverable gold contract for the Asian wholesale gold market. Last week, CME announced a new 1 kilogramme gold contract in Hong Kong.



The new Singapore gold contract differs from others in that as well as acting as a price discovery benchmark for 1kg gold bars in the Asian region, it has been specifically designed to actually deliver gold to wholesalers, because settlement of the contract is in gold 1kg bars and not in cash. A 1kg gold bar is 32.15 troy ounces.

In June the Singapore Exchange (SGX) indicated that their 1kg gold contract would probably be launched by September, but the launch date has now been pushed back to either October or November. The SGX is Singapore’s securities and derivatives exchange and clearing and depository provider.


The Singapore contract will be in lots of 25 kgs, denominated in US dollars,  and it will trade for three hours in the Singapore morning time. Singapore is 7 hours ahead of London and 12 hours ahead of New York, and 2.5 hours ahead of the Indian market, but is in the same time zone as both Hong Kong and Shanghai.


Six consecutive daily contracts will trade at the same time, so when one contract expires, another will be added.


Physical settlement is two days after trade date and consists of  99.99 purity 1kg gold bars that meet the approval of the Singapore Bullion Market Association (SBMA) good delivery list . This means that wholesalers will be able to gauge demand and supply of 1kg bars over the following week.


At a gold conference in Pune, India this weekend, the SGX clarified the new launch date and pointed out how the new 1kg contract could benefit the physical Indian gold market.

At the conference, Derek Neo of the SGX said that the 1kg gold contract will “benefit Indian traders as they will be able to see the price trend of gold kilobar when the Singapore market for gold closes at 11.30 a.m” (9am Indian time), and that since India is one of the world’s largest importers of gold, “the contract is going to provide another avenue to source quality gold”.


The SGX is exclusively using the vaults of Brinks Singapore as the official vault for the contract’s 1kg gold bars. In Singapore, Brinks have a vaulting facility in the free port of Singapore.


Four international banks that are members of the SBMA will act as market makers for the new gold contract and these banks need to guarantee availability of 1 kg gold bars in order to provide the liquidity to allow the new contract to work as designed. These banks are JP Morgan, the Bank of Nova Scotia, Standard Chartered Bank, and Standard Bank.


Since the SGX 1kg gold contract is traded on the Exchange and is regulated, it will be interesting to see the published trading statistics from the Exchange once the gold contract product is up and running and the volume of 1kg bars that these four bullion banks are providing to the Brinks vault in Singapore.


New Hong Kong Gold Contract

The US based CME Group who run the Comex gold futures exchange in New York and also host the new LBMA Silver Price auction in London have also announced plans for a new 1kg gold product in Hong Kong.

The CME’s new Hong Kong 1kg product is a US dollar denominated gold futures contract. It will trade on the Comex in New York and not in Hong Kong, but it will be settled and deliverable in Hong Kong at exchange-approved vaults. This is significantly different to the SGX physically deliverable 1kg gold contract in Singapore.

There are still not many details released about the CME’s Hong Kong gold futures contract, but it will primarily be a cash settled contract for 99.99% fine 1kg gold bars, and is designed for global market participants who want to arbitrage and hedge risk between the New York or London gold prices and the Hong Kong regional price.

Last Thursday, the CME announced that three vault providers have applied to be approved vaults for the gold kilo contract. These are Via Mat Management AG, Brinks Global Services USA, and HKIA Precious Metals Depository Ltd.

Via Mat, Brinks and HKIA all have vaulting facilities in Hong Kong.

The contract specifications, such as contract size and trading hours have not yet been released but it’s thought that the CME’s Hong Kong contract will be structured similarly to the CME’s existing 100-ounce COMEX gold futures contract that trades in New York.


MARKET UPDATE

Today’s AM fix was USD 1,234.75, EUR 955.62 and GBP 759.43 per ounce.

Friday’s AM fix was USD 1,237.25, EUR 957.11 and GBP 760.87 per ounce.



Gold in USD - 5 Years (Thomson Reuters)

Gold fell $11.40 or 0.92% to $1,230.70 per ounce and silver slid $0.06 or 0.32% to $18.65 per ounce on Friday. Last week, gold and silver were both down 3% and 2.86%.


Gold recovered from Friday’s low in Asian trading this morning, ending in Singapore near $1233, before continuing the recovery in London trading. Silver is trading in London at $18.58, essentially unchanged from Friday’s New York close.

Precious metal trading will this week be predominantly affected by the upcoming US Fed FOMC meeting scheduled for tomorrow and Wednesday.

The Platinum price has recovered slightly today, rising 0.51% to $1371. Palladium is also stronger, up 1.93% at $845.

See the Essential Guide To Storing Gold In Singapore (Click link)



 

 

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Tue, 09/16/2014 - 03:43 | 5221686 Jano
Jano's picture

They are going to trade

1. 1kg bars (which is fine)

2. futures linked to the price of 1kg bars (play the cards under the table)

Involved banks will be : JP Morgan, the Bank of Nova Scotia, Standard Chartered Bank, and Standard Bank.

Now I understand, why DB quit the LBMA rigging in London.

Now the rigging of gold price will be moved to HK and SGX.

Tue, 09/16/2014 - 01:27 | 5221538 Sovereign Economist
Sovereign Economist's picture

Well, Well, Welll...  What do you know but the Rothschild bankers are MARKET MAKERS???

 

I HAD such HIGH HOPES that Shanghai and Singapore would offer HONEST MARKETS for Precious Metals...

 

...Silly ME!  :(

Mon, 09/15/2014 - 16:14 | 5219833 Quaderratic Probing
Quaderratic Probing's picture

SGX sets gold price to $ 3,560 USD

Every one wants to sell there, but that would mean having to de-stack and ship your gold them, so they don't

No one wants to buy there because CME CHANGES THE RULES making gold trades cheaper

CME sets price at $ 900 USD CASH ONLY SETTLEMENT

Futures traders flood in on the spread CME makes a ton.

As price approaches $2,250 Central bank naked short the beejeezus out of her driving price back to $900

No one cares that they never held gold phiz they just doubled their money and move on.

SGX follows CME or goes out of business 

Mon, 09/15/2014 - 21:01 | 5220805 Squid-puppets a...
Squid-puppets a-go-go's picture

at that price i reckon plenty would destack and ship, so im not convinced of your analysis.

It does concern me, however, the derivative services that asia is starting to participate in -it makes me wonder if they are looking for a price reset or to collude in the suppression

Mon, 09/15/2014 - 21:34 | 5220910 Quaderratic Probing
Quaderratic Probing's picture

I have asked here at what price bugs would sell really no answer other than buy when its running because the sky is the limit or buy when it down because its cheap. 

Your other point is very relevent , if the point is to get involved in derivitive products with gold  as a base then they are one and same as the squids.

Tue, 09/16/2014 - 00:59 | 5221477 Squid-puppets a...
Squid-puppets a-go-go's picture

i personally wont sell at less than around $3000/oz... but even at that price id be looking at fundamentals and momentum before. And with silver I think $80/oz is a fair price, but given its volatility id happily wait until overshoot and sell at just sub $100 

Tue, 09/16/2014 - 01:44 | 5221561 Quaderratic Probing
Quaderratic Probing's picture

Fair reply thanks. I dont think they will let price get near those values. If get the chance take the cash buy a cow and you can have milk every day not just till the silver runs out.

You can even sell milk for gold later

Mon, 09/15/2014 - 16:08 | 5219803 Spacecadet60
Spacecadet60's picture

Who ever has the most gold and comodities at the end wins.

Mon, 09/15/2014 - 16:18 | 5219846 Quaderratic Probing
Quaderratic Probing's picture

Who ever does not die in the end wins...oh shit not a chance of that. Life stupid game.

Mon, 09/15/2014 - 14:52 | 5219468 loveyajimbo
loveyajimbo's picture

CME = Crooks      CFTC = Crooks      Holder = A-Hole AND Crook

Mon, 09/15/2014 - 13:27 | 5219063 joego1
joego1's picture

Wow! where did that bright light come from shining under the camel tent? Look, there goes a squid!

What a novel concept, actually recieving something real in return.

Mon, 09/15/2014 - 12:15 | 5218879 lordbyroniv
lordbyroniv's picture

 

 

What am I missing about the importance of a 'Real' Metals Exchange in Shanghai or Singapore?

 

Why cannot the West just print fiat and suck up all the metals and bring them back to the West?

Mon, 09/15/2014 - 13:11 | 5219082 SoilMyselfRotten
SoilMyselfRotten's picture

That was what i was wondering about Germanys gold. Why didn't we just use fiat and purchase the gold on the open market and avoid the whole dark spell cast over the US gold holdings? I don't get it.

Mon, 09/15/2014 - 13:59 | 5219242 Latitude25
Latitude25's picture

It's mostly all in Aisia now and it's not leaving for a long time.

Mon, 09/15/2014 - 21:40 | 5220937 Quaderratic Probing
Quaderratic Probing's picture

So the new gold market sets a price for gold that will not leave China?

I can buy it at a new super high price but cant have it.

And that would some how make it impossible for them to lie about my holding, that l cant hold?

Tue, 09/16/2014 - 05:10 | 5221792 disabledvet
disabledvet's picture

Yes!

Mon, 09/15/2014 - 14:27 | 5219372 outamyeffinway
outamyeffinway's picture

Wait till they announce NO USD ACCEPTED!! Got Gold?

Mon, 09/15/2014 - 21:06 | 5220817 Squid-puppets a...
Squid-puppets a-go-go's picture

that would certainly be a slip of the tungsten

Mon, 09/15/2014 - 21:00 | 5219132 lordbyroniv
lordbyroniv's picture

Yup!

 

EBAY has lots of gold for sale

 

:)

Mon, 09/15/2014 - 11:48 | 5218763 MansaMusa
MansaMusa's picture

Nice.  I wish I could afford to trade in 1kg bars

Mon, 09/15/2014 - 13:34 | 5219153 laomei
laomei's picture

1kg isn't very much, current pricing is around 243,000 RMB.  I guess if you're poor that's "a lot" but it's not really anything to be in awe of.  The 50kg bars on the other hand... 

Tue, 09/16/2014 - 05:10 | 5221793 disabledvet
disabledvet's picture

Dude...one kilo (half a pound or thereabouts) is a lot of gold.

Tue, 09/16/2014 - 05:15 | 5221798 Tinky
Tinky's picture

one kilogram equals 2.2 pounds

Mon, 09/15/2014 - 13:28 | 5219138 joego1
joego1's picture

Just do it like J.P. morgan and use "pretend" 1kg bars, works great for them!

Mon, 09/15/2014 - 11:44 | 5218747 Latitude25
Latitude25's picture

"These banks are JP Morgan, ........................."

Oh well. It looked so real until that was mentioned. Say goodby to true price discovery here.

Mon, 09/15/2014 - 12:36 | 5218940 Boxed Merlot
Boxed Merlot's picture

Say goodby to true price discovery here...

 

I thought the same thing as well.  If anyone knows how the 3 shell game is played, it would be Jaime and his cohorts.  As China continues to repatriate their Honk Kong brethren, I would think Singapore will at least be the shell of choice initially.  It will be interesting to see if China would actually allow physical delivery to a foriegn entity regardless of the currency the trade is denominated in.  This Chinese laundry at least looks like a decent attempt to clean the dirty shirt fiats listed.

Time will tell.

 

jmo.

Tue, 09/16/2014 - 05:14 | 5221799 disabledvet
disabledvet's picture

You have to do the math on what it costs to mine gold.

Or even get it from outer spice...I mean space. Outer SPACE.

"It's because of gold bugs that we have NASA." That's why while my kneed Viking says "trash the City of York and leave all the gold and silver loot in some river somewhere" because "my Paganism is more important to me."

Still...space programs are cool.

I think even a Viking would say that.

Certainly the Russians do...

Mon, 09/15/2014 - 11:35 | 5218714 Hongcha
Hongcha's picture

Is that the Singapore skyline?  

Mon, 09/15/2014 - 15:54 | 5219736 Cognitive Dissonance
Cognitive Dissonance's picture

It is....until the US nukes it for hating our freedom fiat.

Mon, 09/15/2014 - 22:48 | 5221146 RockyRacoon
RockyRacoon's picture

Is it just me, or is this just the same old bunch of crooks...

Four international banks that are members of the SBMA will act as market makers for the new gold contract and these banks need to guarantee availability of 1 kg gold bars in order to provide the liquidity to allow the new contract to work as designed. These banks are JP Morgan, the Bank of Nova Scotia, Standard Chartered Bank, and Standard Bank.

Mon, 09/15/2014 - 16:43 | 5219931 messymerry
messymerry's picture

Freedom, what a nostalgic word. It is a shame to see it struck through. I want to curl up in a foetal position and bawl my eyes out...orrrr, I suppose I could go to the local biker bar and console myself with some pizza and beer. Biker bars are still pretty free places...

Mon, 09/15/2014 - 22:22 | 5221066 Never One Roach
Never One Roach's picture

I hope I can jump in line on Day 1 and buy the very first gold contract for those 25 kgs ... so I can hang it on the wall and show it off to all my friends ... especially if it has a pretty picture on it.

Lets see ... 25 kg ... 99.99% pure yellow metal ... mmmm .... that'll come to ....

 

"Honey, can you run upstairs and bring down little Johnny's Piggy Bank, please ...."

Mon, 09/15/2014 - 10:55 | 5218565 Luis_
Luis_'s picture

Keep your gold safe, don't play the german...

Mon, 09/15/2014 - 11:32 | 5218698 knukles
knukles's picture

That is awesome!  A delivery settlement, only! 
That'll cut down on the funny shit during settlement periods as there will be True Price Convergence Between Cash and Futures At Settlement!

Oh man oh man.  Just think of a monster long standing for delivery.
I can see it now....   Outstandings of magnitude greater than the vaulted supply!

Yummah!

Mon, 09/15/2014 - 13:23 | 5219124 thunderchief
thunderchief's picture

I think the point is "lots of 25 kg"

So if you want lets say a ton of gold, the price should rise rapidly in 25 kg increments as you buy. It makes it hard to buy without moving price, or sell without producing the metal.

I think is called supply and demand.

Mon, 09/15/2014 - 14:01 | 5219251 WhackoWarner
WhackoWarner's picture

Singapore Precious Metals Exchange (SGPMX), the world’s first physical precious metals exchange with peer-to-peer bullion trading capabilities, today announced the appointment of precious metals specialist, Jim Sinclair, as Executive Chairman of SGPMX. It also announced the establishment of an Independent Advisory Board chaired by Jim Sinclair to oversee the transparency and management of the Exchange, as well as to develop education and advocacy programmes around physical bullion and wealth storage.

 

EDIT:  Above is from Nov. 2013

Mon, 09/15/2014 - 17:30 | 5220059 FlowerofLife
FlowerofLife's picture

I was going to ask if anyone knew about SGPMX. What's up with it?

I looked at their trading platform a few weeks ago and there hadn't been any trades, ever. Just that first one by Jim Rogers more than a year ago. Asked customer service about trading and they said people preferred to buy coins in the coin shop.

 

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